Finders Resources
About the author:
- Author name:
- By Chris Brown
- Job title:
- Senior Analyst
- Date posted:
- 21 November 2016, 12:18 PM
- Sectors Covered:
- Junior (Emerging) Resources
Wetar – a US$165m development (FND ≈72%)
On Wetar Island, Indonesia, Finders Resources (FND) and its partners, including Korea's largest trading company Daewoo International, have spent US$143m upgrading Copper Cathode production from 3kt per year to 28kt per year, with a projected cash cost of US$1.05/lb Cu. Proved and Probable Reserves (to JORC Code 2012 standards) are 8.9Mt @ 2.4% Cu within the Kali Kuning and Lerokis optimised pit shells which contain 210,000t of copper to support a +six-year mine life.
Prior tenement holders identified a 5-10Mt copper sulphide target 2km from Kali Kuning at Meron, and there is further scope for substantial exploration success at other drilled gold-copper deposits to extend the mine life.
Efficient execution despite the location
Construction of the mine and 25kt per year copper SX-EW plant commenced May 2015, with the 3kt per year plant continuing production. Despite the remote location, LME Grade A copper was stripped in June 2016. Production continued to ramp up, achieving 56% of nameplate for the September quarter, reaching nameplate capacity intermittently in the month of September. A C1 cash cost of US$1.11/b of copper was reported for the month of September, indicating that the target of 60Mlbs of copper per year at a C1 cost of US$1.05/lb is in view.
Investment view – after raising A$12m
With construction and the production ramp-up taking longer than scheduled, Finders Resources has closed out some of its hedges (US$42m) and issued 100m shares at A$0.12 raising A$12m. Ongoing leach pad development, realisation of the Reserve grand and tonnage in production and the initial leach performance of the heaps are well understood from operations to date. After the recent equity raising, we see the major risks now as being the rate of copper extraction through the life of each heap, and logistical and operational issues at a remote site.
With a C1 cost of US$1.05/lb Wetar is a robust mine, although the level of the copper price will determine the value. We maintain our Add recommendation.
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